Ronald Peña, Et Al. V. Sky Solar Holdings, Ltd. , Et Al. 17-CV-04572
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Case 1:17-cv-04572-LTS-DCF Document 56 Filed 02/16/18 Page 1 of 130 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ANDREW BARILLI AND RONALD PEÑA, Individually and on Behalf of All Case No. 17-cv-4572-LTS-DCF Others Similarly Situated, Plaintiffs, JURY TRIAL DEMANDED vs. SKY SOLAR HOLDINGS, LTD., WEILI SU, JIANMIN WANG, YI ZHANG, XIAOGUANG DUAN, HAO WU, DONGLIANG LIN, ROTH CAPITAL PARTNERS, LLC, AND NORTHLAND SECURITIES, INC., Defendants. SECOND CONSOLIDATED AMENDED CLASS ACTION COMPLAINT WOLF POPPER LLP Robert C. Finkel Andrew E. Lencyk Fei-Lu Qian 845 Third Avenue, 12th Floor New York, New York 10022 Attorneys for Lead Plaintiff and Lead Counsel for the Class Case 1:17-cv-04572-LTS-DCF Document 56 Filed 02/16/18 Page 2 of 130 TABLE OF CONTENTS I. NATURE OF THE ACTION ............................................................................................. 2 II. PRELIMINARY STATEMENT ........................................................................................ 3 III. JURISDICTION AND VENUE ......................................................................................... 7 IV. PARTIES ............................................................................................................................ 7 V. PLAINTIFFS’CLASS ACTION ALLEGATIONS .......................................................... 12 VI. SUBSTANTIVE ALLEGATIONS FOR THE SECURITIES ACT CLAIMS ................ 15 A. Background Facts Prior to the IPO ....................................................................... 15 B. Initial Public Offering ........................................................................................... 17 C. The False and Misleading Prospectus ................................................................... 19 1. The Prospectus Failed to Disclose Su’s History of Avoiding Payment of Civil Debt. Su’s Financial Background Was A Material Fact Since He Was Identified As “Essential to [Sky Solar’s] Continuing Success.” ................................................................................................... 20 2. The Prospectus Further Misrepresented Sky Solar’s Corporate Governance and Internal Controls, which Were Inadequate to Catch Su’s Misconduct........................................................................................ 35 3. The Prospectus Misrepresented Su’s Success In Developing A Spanish Solar Business and Failed to Disclosed that Su’s Operations in Spain Lost €30 Million Through Fraud ................................................ 41 4. The Prospectus Misrepresented Facts Concerning the Japanese Feed- in-Tariff Program and Its Impact on Sky Solar’s Business ...................... 43 a. The Changes in Energy Industry and FIT ..................................... 48 b. The Statements in the Prospectus Regarding Japan’s FIT Regime Were Materially False and Misleading. ........................................ 55 5. The Prospectus Misrepresented Material Facts Concerning Chile ........... 62 6. The Prospectus Misrepresented that Sky Solar Had a “Broad Geographic Reach,” an “Established Presence Across Key Solar Markets,” and “Established Pipeline Projects.” ........................................ 66 a. Czech Republic ............................................................................. 68 b. Greece ........................................................................................... 68 c. Germany ........................................................................................ 69 7. The Prospectus Misrepresented Sky Solar’s Access to Financing ........... 70 Case 1:17-cv-04572-LTS-DCF Document 56 Filed 02/16/18 Page 3 of 130 8. The Prospectus Misrepresented Sky Solar’s Ability to Expand Its Solar Assets ............................................................................................... 75 9. The Prospectus Misrepresented Sky Solar’s Reason for Converting to an IPP Business Model ............................................................................. 80 VII. STATUTE OF LIMITATIONS ........................................................................................ 80 VIII. CLAIMS FOR RELIEF UNDER THE SECURITIES ACT ............................................ 86 COUNT I .......................................................................................................................... 86 COUNT II ......................................................................................................................... 89 IX. EXCHANGE ACT CLAIMS ........................................................................................... 90 A. Nature of the Action .............................................................................................. 90 B. Substantive Allegations ........................................................................................ 92 1. Weili Su’s Troubled Past .......................................................................... 92 C. Materially False and Misleading False and Misleading Statements Issued .......... 94 1. Defendant Su’s Credentials ....................................................................... 99 2. Sky Solar’s Push Into the Chinese Market With Its Flawed Corporate Governance Guidelines ........................................................................... 100 3. 2014 Earnings Call .................................................................................. 101 4. Q1 2015 Earnings Call ............................................................................ 102 D. The Truth Slowly Emerges ................................................................................. 103 E. Post-Class Period Events .................................................................................... 105 F. Additional Scienter Allegations .......................................................................... 107 1. Weili Su Acted with Scienter .................................................................. 110 2. Jianmin Wang Acted with Scienter......................................................... 112 3. Sky Solar ................................................................................................. 114 G. Loss Causation .................................................................................................... 115 H. Presumption of Reliance ..................................................................................... 120 I. The Safe Harbor Provision Is Inapplicable ......................................................... 121 X. CLAIMS FOR RELIEF UNDER THE EXCHANGE ACT........................................... 121 COUNT III ...................................................................................................................... 121 COUNT IV...................................................................................................................... 125 XI. PRAYER FOR RELIEF ................................................................................................. 126 XII. DEMAND FOR TRIAL BY JURY ................................................................................ 127 ii Case 1:17-cv-04572-LTS-DCF Document 56 Filed 02/16/18 Page 4 of 130 Lead Plaintiff Ronald Peña (“Peña”) and additional named plaintiff Andrew Barilli (“Barilli”) (collectively, “Plaintiffs”), individually and on behalf of all other persons similarly situated, by their undersigned attorneys, hereby bring this Second Consolidated Amended Class Action Complaint (“Complaint”) against Sky Solar Holdings, Ltd. (“Sky Solar” or the “Company”), Weili Su (“Su”), Jianmin Wang (“Wang”), Yi Zhang (“Zhang”), Xiaoguang Duan (“Duan”), Hao Wu (“Wu”), Dongliang Lin (“Lin”), Roth Capital Partners, LLC (“Roth”), and Northland Securities, Inc. (“Northland”) (collectively, “Defendants”). Plaintiffs’ allegations are based on their personal knowledge as to their own acts, and on information and belief as to all other matters, such information and belief having been informed by the investigation conducted by Lead Counsel, which includes analyses of publicly available information, including, among other things (a) regulatory filings made by Sky Solar with the United States Securities and Exchange Commission (“SEC”); (b) press releases and investor presentations and conference calls issued or conducted by Sky Solar; (c) news stories, articles, reports, internet postings and other publicly available information concerning Sky Solar; (d) interviews of former employees (including a former employee identified as a Confidential Witness); (e) consultations with experts on accounting and solar power; and (f) information readily obtainable on the Internet. Lead Counsel’s investigation into the matters alleged herein is continuing. Many relevant facts are known only to, or are exclusively within the possession of the Defendants. Plaintiffs believe that substantial additional evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. #196058v4 Case 1:17-cv-04572-LTS-DCF Document 56 Filed 02/16/18 Page 5 of 130 I. NATURE OF THE ACTION 1. This is a federal securities class action on behalf of a class consisting of all persons who purchased or otherwise acquired the American Depositary Shares (“ADSs”) of Sky Solar: (1) pursuant or traceable to Sky Solar’s false and misleading Registration Statement and Prospectus (collectively, the “Prospectus”) issued in connection with the Company’s initial public offering on or about November 13, 2014 (the “IPO”) seeking to pursue remedies